Rod Nickel

WINNIPEG, Manitoba (Reuters). Thousands of people work for Canada’s second largest railway. Canadian Pacific Railway Ltd. (NYSE:) threatened strike action this week. This could disrupt the flow of coal, grain and potash at a time when commodity prices are soaring.

Canada’s fragile supply chain faces the strike as the latest threat. The country was hit hard last year by floods that flooded British Columbia, causing damage to its infrastructure and preventing access to Canada’s most important port. Food inflation has been sparked by the COVID-19 pandemic and a shortage of truckers.

Canada is the country with the largest area, second only to Russia. It heavily depends on railroads to transport manufactured and raw goods from port to its products.

The network of CP runs through most of Southern Canada and as far as Kansas City, Missouri in the United States. Grain is CP’s biggest business.

Canadian National Railway (TSX:) Co, the last significant Canadian rail labor disruption in 2019 lasted for eight days. Shippers took several weeks to get back on their feet.

Teamsters Canada Rail Conference members, which includes engineers, conductors, and yard workers, decided to strike this month just after midnight on Wednesday. A spokesperson from CP stated that the union has not given 72 hours notice. However, this means that no legal stoppage of work can take place before Friday.

According to the union, wages, pensions and benefits are the main issues.

John Brooks, Chief Marketing Officer at CP stated in a March bulletin that “should the (union exercise its right of strike), CP will not be able to operate the railway.”

CP claimed that the most important bargaining issue in negotiations is the demand of the union to increase pension caps. Nadeem Velani (CFO) stated Tuesday at the New York Investor Conference that the railway was not ready to meet that demand.

Velani stated that the company was considering a lockout prior to any strike but would need 72 hour notice. However, Velani has not provided such notice.

According to a coalition Canadian trade associations, supply chain disruptions have already affected manufacturers of all goods from food and cars.

Many U.S. farmers’ groups sent a letter asking President Joe Biden and the Canadian government for help to avoid a strike.

CP carries U.S. wheat to Pacific Northwest export terminals. It also moves potash fertilizer in the United States. This is vital ahead of spring planting season.

The western sanctions on Russia and Belarus for their invasion of Ukraine have caused potash prices to soar. Canada is the 2nd and #3 producer.

According to Natashia Stinka spokesperson for Canpotex Ltd (the company that owns Canpotex Ltd), a strike by CP would have serious consequences for potash transportation to ports in order to ship to overseas buyers. Nutrien (NYSE) Ltd. and Mosaic Co. (NYSE)

The federal mediators assist both sides in negotiations, but the Canadian government would prefer a negotiated solution, according to a spokesperson from the ministry of employment.

Canadian workers can strike back if the government passes legislation.